Big drop in number of gaming machine operators continues, could accelerate under Gambling Act
7/4/2004
Figures released today by the Department of Internal Affairs show that the significant drop in number of gaming machine “societies” has continued and the number of gaming machines licensed to operate in pubs and clubs has decreased for the third consecutive quarter.
The Director of the Department’s Gaming and Censorship Regulation Group, Keith Manch, said that since 1999 the number of societies has dropped from just under 1,000 to 661.
The number of societies could reduce even faster after July 1 when the licensing requirements of the Gambling Act come into force.
“The new law will make it much harder to get a licence to operate gaming machines,” Mr Manch said.
“The biggest change is that societies will have to prove that they are suitable to operate gaming machines.
“That is the reverse of the current situation in which the Department has to prove a society is unsuitable if it is to decline a licence.
“This is not just playing with words; it is a fundamentally different approach. The relevant sections of the Gambling Act start with the statement that the Department must refuse to grant the licence. It then puts the onus on the society to prove why it should be allowed a licence.”
Numbers of machines
What impact the continued drop in the number of societies will have on gaming machine numbers is still unclear.
Historically, as the number of societies decreased the number of machines increased. That is, the remaining societies got bigger.
However, the immediate impact of the Gambling Act being passed in September last year was the first ever reduction in number of gaming machines licensed to operate in pubs and clubs, and that has continued at a slower rate since then.
Local communities will have a significant say in what happens to this trend in future. The Act required city and district councils to consult with their communities and then to develop gambling policies. Under the Act:
· no machines can be added to any existing venue without first getting council consent
· no new gambling venues can open without first getting council consent
· councils’ policies could require societies operating at gambling venues that did not have a licence on 17 October 2001 (or that did have a licence then but did not have one for a period of six months or more after that date) to get rid of all their gaming machines, or to reduce the number of machines, at those venues.
Put simply, the councils’ role is to look at how they want to control the growth of gambling in their communities, while the Department’s role is to look at who operates the gambling.
If a council consent is obtained, the society must still apply to the Department for a licence and, from July 1, meet the requirements of the new Act.
Fewer machines does NOT mean the community must get less money
Mr Manch said there is often confusion that fewer gaming machines must somehow mean less money for community groups.
The Department does not accept that fewer machines inevitably means less money for community groups. The reasons for this are:
· the statistics do not show a direct link between the number of machines and profits
· there is scope for the sector to increase its efficiency
· gamblers behaviour.
From 1999 to 2003 gaming machine societies’ annual gross profits almost trebled to $941 million a year, while at the same time the number of machines doubled and the number of societies decreased by almost a third.
“It is difficult to draw any conclusion from these statistics other than bigger societies probably led to efficiencies of scale,” Mr Manch said.
During the same period, the amount of money societies paid pubs to host gaming machines more than doubled per machine and more than quadrupled in total.
In 1999 a pub with 18 gaming machines was paid, on average, $45,864 ($49 per machine per week) to cover its actual reasonable and necessary expenses. By 2003 that amount had increased to $105,768 ($113 per machine per week). This is an increase of 130% at a time of virtually no inflation.
In 2003 the societies spent more than $315 million on administration and operating costs for 25,000 gaming machines (this includes their payments to pubs). That is, gamblers had to lose $315 million to cover the sectors’ costs before a single dollar could be raised for grants to community groups.
Another important factor to consider is gamblers’ behaviour. Gambling on gaming machines is now entrenched in New Zealand. Gamblers have shown that if a pub or club turns off its machines, then they simply go to another venue.
“It is quite possible that even if the amount of money lost by gamblers decreased, continued increases in the sector’s efficiency and integrity could mean more money going to community organisations,” Mr Manch said.
Background
Gaming machine operations licensed as at | Societies | Venues | Gaming machines |
| 30 June 2003 | 699 | 2,122 | 25,221 |
| 22 September 2003 | 685 | 2,100 | 23,083 |
| 31 December 2003 | 672 | 2,031 | 22,734 |
| 31 March 2004 | 661 | 2,007 | 22,646 |
More detailed information about gaming machine numbers, including local figures, will be available from the Department’s website soon. Go to www.dia.govt.nz, click on “gambling”, then click on “gaming statistics”.
The numbers of venues and machines within any particular council’s area can increase or decrease from quarter to quarter. This is because machines are frequently taken off venues to be repaired, upgraded or replaced, and it is not uncommon for venues to transfer between societies. If machines are off-site or a venue is “between” societies at the end of a quarter, they are not included in statistics at that date. When the machines are returned or replaced, or the transfer of the venue to another society is completed, they are added back into the statistics.
The numbers of venues and machines fluctuate daily, and the statistics are as at a specified day. Overall trends are shown over several quarters’ statistics.
Some venues had been listed under the wrong council. For example, four venues with a total of 37 machines had been listed under Auckland City but are now, correctly, listed under Waitakere City. This changes the local numbers but has no effect on the national trends.
Media contact:
Keith Manch
Director Phone 04 495 9449, Cellular 027 445 6420
Vincent Cholewa
Communications Advisor Phone 04 495 9350, Cellular 027 272 4270
